CEO pay bears no resemblance to Bell scandal
For years California has been accused of being hostile to business, and we are currently facing tough economic times. In reading Michael Hiltzik’s Oct. 2 column, “Echoes of Bell in CEO pay,” comparing the atrocious City of Bell scandals to the compensation of Occidental Chief Executive Ray Irani, I was struck with two thoughts. First, these two subjects could not be more different. Second, given these challenging days, California should welcome business, especially businesses like Occidental Petroleum, that pay California taxes, reinvest in our economy, create high-paying jobs and provide handsome returns for shareholders.
To be clear, former Bell City Manager Robert Rizzo is charged with 53 felony counts, including the alleged misappropriation of public funds, conflict of interest, falsification of documents and improperly awarding millions in unauthorized loans to himself, city employees and two council members. These accusations constitute an inexcusable breach of public trust and, if true, warrant a stiff punishment.
By contrast, under Irani’s leadership, Occidental has been a tremendous asset to California and our economy. When Irani became CEO of Occidental in 1991, the company had a capitalization of $5 billion, and it has grown to become the fourth-largest oil and gas company in the United States, valued at $66 billion at the end of 2009. That’s a phenomenal increase of more than 1,100%. This success has also tremendously benefited Occidental’s shareholders, because the company leads its peers in total stockholder returns: 76% over the last three years; 204% over the last five years; and 870% over the last 10 years.
In the spirit of disclosure, I know the Iranis personally and my firm has occasionally represented Occidental over the past several years, but fair is fair; while it’s legitimate to question CEO salaries (Occidental has said publicly it is reviewing its pay practices), the same cannot be said regarding the over-the-top attempt to correlate the city of Bell scandal with Irani’s compensation. With a state unemployment rate above 12%, ongoing budget challenges and decreased tax revenues of roughly 20% over the last three years, our primary goal should be to focus on how to grow California’s economy.
Gray Davis, the 37th governor of California, is of counsel to the law firm Loeb & Loeb LLP.
